• Workplace

    Building customer loyalty

    Thu Sep 06 2018
    . 3 min read

    Kim and Mauborgne talk about 'marketspaces' in “Blue Ocean Strategy” as being an area of the marketplace which is devoid of competition and is totally uncontested. They suggest that blue oceans can be created through developing new industries such as e-bay did with on-line auctions or to expand current contested spaces by broadening the boundaries of existing industries. Strategists currently are focusing on eliminating the competition thus maximising returns from creating value for customers. The creation of marketspaces is dependent on the company’s ability to create such a need or demand that the customer emotionally cannot go anywhere else. There are some classic examples of marketspaces that may not immediately spring to mind, when thinking of uncontested marketspaces. There are some cases where the customer will literally want to give total commitment to an organisation, due to ties that are difficult to comprehend in traditional terms. Football clubs are examples of organisations where the customer, is actually not called a customer, but a fan, and is tied to the club in such a way that he does not want to go anywhere else, generally. The customer is tied emotionally to the club in such a way that no other club, and in many cases sport, comes onto the radar of the fan. This attachment can is nurtured in a number of ways: a) historical family ties which continue through the generations i.e. children retain attachment due to the parents b) a particular event that instigates an emotion i.e. the winning of a trophy c) some form of peer pressure. Football fans, or customers will buy items from the club that have absolutely no functional purpose, and will either be saved in the loft or thrown away. For example, the club will change football shirts due to a change of sponsor, but the loyal fan will want to buy the new shirt even though the only thing that has changed is a name on the front. Wouldn’t it be great if companies could tie their customer in a similar way? Places of religious worship, such as churches and temples are another example of organisations benefitting from the emotional ties of the customer. There is a set of beliefs that are being used by these organisations to generate a demand from their customer base. Again, these places do not have customers, but worshippers. These worshippers are attached, genrally from childhood. Some faiths “sell their services” to a particular type of customer that perhaps has experienced certain events and is looking for salvation. There is considerable play on the non-tangible benefits that are derived from emotions and beliefs of the client base. Notice that there is also little chance that in both cases above the customer will change allegiance, and go to a rival organsiation. Football clubs will only lose fickle fans, who probably contribute minimal to the finances, and places of worship will only lose worshippers if there is a major event to challenge their belief systems. Other, more conventional examples are the iPod, developed by Apple and specialist cars, such as Lamborghinis. A value is created in the design and uniqueness of the product, but again the companies attach themselves to the emotions of the customer. Buyers of specialist cars get so attached to their vehicles that they become more valuable, in some cases, than spouses! So what can we learn from these examples. How do we create marketspaces for our products and services that are uncontested and offer long term development of value for the company? The key lessons are: engage the emotions of the customer by developing a brand image that excites the customer base understand the values and beliefs of your customer base create and nurture an identity that the customer base can associate with To maximise the benefits the company needs to be careful that it responds to the challenges of modern day business. Many companies seek to grow rapidly. However, if we look at the sectors discussed above all of the participants in these areas have been around for a long time, creating an identity that the customer wants to be associated with. These identities are rarely compromised through acquisitions of organisations with values and cultures that clash with the company’s own values. Attachment is created by the customer realising that the organisation is an institution that will be around for a long time, and will not compromise it’s position with the customer for short term financial gain. Rakesh Sondhi is Managing Director of BMC Global Services Ltd, based in the UK. Rakesh has authored “Total Strategy”, published by BMC Global Services Publishing in 2003, and “Business Improvement through Learning and Transformation (BuILT)”. See www.BMCGlobalServices.com